Freight Policy Legislative Team

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Freight Policy Legislative Team Financing
Funding Freight Modal Group

• Freight Policy Funding Presentation to the
  Joint Meeting of SCOFA Finance and Funding
  Legislative Team
• Greg Nadeau, Freight Modal Group Chair
• Chicago, Illinois
• August 19, 2008

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Freight Policy Legislative Team Financing
Funding Freight Modal Group

• Emerging world economies are investing in
  transportation and intending to leap into the
  future while the United States patches up the
  past. Every mile of highway, railroad, and
  waterway, every acre of seaport is operating in
  the global economy and, depending on its
  condition and performance, either helps or
  hinders Americas global competitiveness.
• Commissioner Astrid Glynn -Testimony on National
  Strategies for Efficient Freight Transportation -
  Senate Committee on Commerce, Science, and
  Transportation

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Freight Policy Legislative Team Financing
Funding Freight Modal Group

• Recommended Legislative Actions
• Recommendation 3 Fund national freight programs
  to support and grow the economy. (Page 1)
• Congress should fund the freight program at 42
  (25.5) billion between 2010 and 2015, with the
  annual program funding level reaching 9 (5)
  billion by 2015.

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Freight Policy Legislative Team Financing
Funding Freight Modal Group

• Recommendation 6 In order to reach the funding
  target, Congress should consider a menu of
  revenue options to include (Page 2)
• Core Program Funding Options
• Indexing existing and new Highway Trust Fund
  Sources beginning in 2010
• Increasing the gas tax by the equivalent of 10
  cents per gallon
• Increasing the diesel tax by the equivalent of 13
  cents per gallon
• Issuing tax credit bonds to fund surface
  transportation programs
• Discontinuing motor fuel tax exemption
  reimbursement
• Reinstituting collection of interest on Highway
  Trust Fund balances
• Increasing General Fund transfers transit, and
  providing General Fund support for intercity
  passenger rail
• Allocating portions of any carbon tax or
  cap-and-trade auction proceeds for transportation
  reflective of the sectors impact on greenhouse
  gas emissions through investment in Transit,
  Passenger Rail and Freight Mobility
• Freight Program Funding Options (Outside the
  Highway Trust Fund)
• Dedicating a share of customs fees for
  transportation purposes
• Enacting a bill-of-lading charge for all highway
  and rail freight, to be dedicated for freight
  infrastructure improvements
• Enacting container fees in support of freight
  needs
• Including a dedicated source of revenue outside
  the highway Trust Fund to support a Freight
  Corridors program
• Providing authority for tolling where determined
  by States to be an appropriate funding solution.

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Freight Policy Legislative Team Financing
Funding Freight Modal Group

• Concept
• Create a (firewall protected) Freight Account
  (FA)
• Serves as repository for new revenue sources.
• Create the following funds within the FA
• State Freight Network Fund
• Funded with increased revenue from the HTF and
  apportioned to states
• National / Regional Freight Network Corridor
  Fund
• Funded with new sources of dedicated revenue
  outside the HTF
• Rail Network Investment Fund
• Loss of revenue to the GF (Investment Tax
  Credits) and possible rail freight assessments

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Freight Policy Legislative Team Financing
Funding Freight Modal GroupFreight
Considerations (Page 4)

• State Freight Network Fund
• F1. Congress should create a state-administered,
  federally supported freight transportation
  infrastructure investment program funded at an
  average level of 3 billion apportioned annually
  over the term of the authorization.
• This program would make it possible for states to
  undertake programs of freight network
  improvements necessary on the National Network
  and the National Highway System as well as the
  Interstate System to guarantee that the national
  freight system provides efficient links to
  producers and consumers throughout the country.
  It would recognize the diversity of needs among
  the states and the importance of flexibility to
  guarantee that the investments meet those needs.

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Freight Policy Legislative Team Financing
Funding Freight Modal GroupFreight
Considerations (Page 4)

• State Freight Network Fund
• Fund would provide states with flexible resources
  to support state freight plans developed by
  state transportation agencies and MPOs.
• State plans would provide for strategic
  investment strategies to connect with national
  and regional freight networks.
• Funds would be flexible and multi-modal to
  achieve maximum system integration.

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Freight Policy Legislative Team Financing
Funding Freight Modal GroupFreight
Considerations (Page 4)

• F2. Congress should create a fund from new
  sources of revenue for investment in high-return
  projects on national freight corridors.
• That fund should total at least 4 billion
  annually, 2 billion to be apportioned to states
  and 2 billion to be allocated by the U.S. DOT.
  A portion of these funds should be provided to
  state-initiated organizations responsible for
  planning and investing in multi-state,
  multi-modal corridors.

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Freight Policy Legislative Team Financing
Funding Freight Modal GroupFreight
Considerations (Page 4)

• National / Regional Freight Corridor Fund
• Policy Resolution PR-1-08 Resolution Expressing
  Support for Authorization Principles
• Section 1. AASHTO supports the following
  Authorization Principles
• Funding
• Improve the national freight network through an
  initiative funded through freight-related user
  fees generated outside the Highway Trust Fund.
• Section 3. Ten Priority Program Objectives
  recommended by the Commission
• 2) Freight Transportation. Create and fund a
  national freight transportation program, to
  eliminate chokepoints and increase throughput.

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Freight Policy Legislative Team Financing
Funding Freight Modal GroupFreight
Considerations (Page 4)

• National / Regional Freight Corridor Fund
• Policy Resolution PR-1-08 Resolution Expressing
  Support for Authorization Principles
• Section 2. The Board of Directors is pleased that
  the Commission recommendations summarized below
  in Section 2, and the ten priority program
  objectives identified by the Commission, which
  are listed below in Section 3, closely parallel
  policies that AASHTO supports and will continue
  to review.
• Multimodal Approach Needed.
• Our Nation needs to put more emphasis on transit
  and intercity passenger rail. It is also
  important to increase the market share for
  freight rail and make significant increases in
  highway investment.
• Funding Dedicated to Freight-Related
  Transportation Improvements.
• Given the strong Federal interest in freight
  movement, Congress will need to make available a
  variety of funding sources to meet needs. These
  include a portion of Customs duties and a federal
  freight fee.

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Freight Policy Legislative Team Financing
Funding Freight Modal GroupFreight
Considerations (Page 4)

• National / Regional Freight Corridor Fund
• Policy Resolution PR-1-08 Resolution Expressing
  Support for Authorization Principles
• Appendix A. Policies Adopted by AASHTO Which
  Closely Parallel the Commissions Ten Priority
  Program objectives.
• Freight
• From resources outside the Highway Trust Fund,
  additional Federal governmental financing should
  be provided for freight-related investments,
  including freight gateways, connectors, corridors
  and border crossings. (Policy Report, page 60.)

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Freight Policy Legislative Team Financing
Funding Freight Modal GroupFreight
Considerations (Page 4)

• Rail Network Investment Fund
• Section 2. The Board of Directors is pleased that
  the Commission recommendations summarized below
  in Section 2, and the ten priority program
  objectives identified by the Commission, which
  are listed below in Section 3, closely parallel
  policies that AASHTO supports and will continue
  to review.
• Assistance for Rail-Freight.
• The Commission recommends that Federal
  Investment Tax Credits be granted to freight
  railroads for rail investments which expand
  capacity. AASHTO has indicated support for this
  concept providing that a satisfactory mechanism
  for determining public benefit can be determined
  and any associated intercity rail service is
  protected.

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Revenue Commission Report

• Rail Network Investment Fund
• Association of American Railroads (National Rail
  Freight Infrastructure Capacity and Investment
  Study)
• Rail Investment Need to maintain market share and
  achieve performance improvements 135 billion
  / 28 years (Class 1)
• Industry Generated 96 billion
• Unmet Need 39 billion Annual Gap
  1.4 billion
• (Does not include Class 2 3 needs)

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Freight Policy Legislative Team Financing
Funding Freight Modal Group

• Recommended Legislative Actions
• Proposed Surface Transportation Funding Levels
  (Page 6)

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Freight Policy Legislative Team Financing
Funding Freight Modal GroupFreight
Considerations (Page 4)

• F3. The states, the freight industry, and the
  federal government should collaborate on the
  analysis and consensus-building needed to
  determine the level of mix of funding and
  financing from new sources that include, but are
  not limited to the possible possibilities
  enumerated below.
• Getting to final conclusions and
  recommendations will require considerably more
  analysis and also negotiation among the
  interested parties. It is recommended that
  AASHTO initiate a public-private working group
  involving the Freight Stakeholders Coalition,
  with technical support to attempt to develop
  consensus recommendations on revenue sources for
  freight transportation investment.
• Revenues from Climate Change Legislation
• Customs Fees
• Bill of Lading Fee
• Container Fee
• Diesel fuel tax increase
• Tax incentives for private investment
• Tax Credit Bond Financing
• Government-Business partnerships
• Removing Obstacles to Private Investment
• Freight Transportation Value Tax
• Weight/Distance Tax

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Freight Policy Legislative Team Financing
Funding Freight Modal GroupFreight
Considerations (Page 4)

• F4. Congress should authorize an investment tax
  credit for Class 1 freight rail projects that
  create needed new capacity in priority corridors
  and generate significant public benefits.
  Congress should also reauthorize the investment
  tax credit for capital investment in short line
  and regional railroads.
• F5. Congress should reauthorize the following
  programs
• Transportation Infrastructure Finance and
  Innovation Act amendments (TIFIA) - Sec. 1601
• (Extend Regional Railroad Tax Credits)
• State Infrastructure Banks amendments - Sec. 1602
• Private Activity Bonds for Intermodal Facilities
  - Sec. 1143
• Capital Grants for Rail Line Relocation Projects
  - Sec. 9002
• Rail Rehabilitation and Improvement Financing
  amendments (RRIF) - Sec. 9003
• Rail-Highway Crossings - Sec. 130

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Freight Policy Legislative Team Financing
Funding Freight Modal Group

• Thank You